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By Keith Hill
Adjustments to tax items and pension plan amounts for use in 2018 were released Oct. 19 by the Internal Revenue Service.
The monthly limit for the qualified transportation fringe benefits and for qualified parking is to increase to $260 from $255 in 2018 while other tax benefits are to increase slightly in 2018 because of inflation adjustments, the IRS said in Revenue Procedure 2017-58.
Each year, the agency publishes inflation adjustments for more than 50 tax provisions. The latest adjustments are to be used on 2018 tax returns filed in 2019.
Following are payroll-related provisions that are to change in 2018:
•The personal exemption is to increase to $4,150 from $4,050.
•The standard deduction for married filing jointly is to increase to $13,000 from $12,700 in 2017, to $6,500 from $6,350 for single taxpayers and married individuals filing separately, and to $9,550 from $9,350 for heads of households.
•The foreign earned income exclusion is to increase to $104,100 from $102,100.
•The adoption tax credit is to increase to $13,840 from $13,570.
•The health flexible spending arrangement limitation is to increase to $2,650 from $2,600.
•Penalty amounts for failing to file tax returns and deposit taxes also increase for 2018, the revenue procedure said.
Regarding retirement, the contribution limit for employees who participate in Section 401(k), 403(b), and most 457 plans in 2018 is to increase to $18,500 from $18,000, the IRS said in Notice 2017-64, also released Oct. 19. The catch-up contribution limit remains unchanged at $6,000 while the limit regarding SIMPLE retirement accounts remains unchanged at $12,500, the agency said.
The compensation limit used in defining a highly compensated employee for 2018 remains unchanged at $120,000, the IRS said.
The annual compensation limit for qualified plans is to increase to $275,000 from $270,000, and the compensation limitation for defined contribution plans is to increase to $55,000 from $54,000, the agency said.
The dollar limitation of a key employee in a top-heavy plan remains at $175,000 for 2018.
The compensation limit of a control employee for fringe benefit valuation purposes increases to $110,000 from $105,000.
Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans, the agency said.
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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